OIG surveys inhalation drug service costs

Thursday, June 30, 2005

WASHINGTON -- The Office of Inspector General (OIG) in May distributed a survey to a random sample of respiratory therapy providers aimed at gathering information on the services provided to Medicare's respiratory patients in 2003.
The information the OIG is soliciting could be used in making future decisions about the dispensing fee for inhalation therapy.
The fee, established under 2005's new average sales price reimbursement formula, is currently $57 for a 30-day supply and $80 for a 90-day supply of respiratory medications.
"Most providers are already having a difficult time providing albuterol and ipratropium at this point," said Mickey Letson, president of the Letco Companies. "Any deduction in that dispensing fee eliminates all generic drugs right then because that is the only profitability for generics right now. I don't think CMS wants to mandate that kind of rate increase."
For that reason, AAHomecare called the survey "critically important" and urged providers to answer the questionnaire accurately by recording all services provided and all contact made with patients. Those encounters, said AAHomecare, will lend weight to the arguments that there are extensive costs associated with dispensing inhalation drugs.
The association also worried that the survey itself was incomplete and could lead to some inaccurate conclusions. AAHomecare said the questionnaire did not cover all the possible dispensing fee service categories, including after-hours service. It also omits billing activities, which factor significantly into the cost of providing respiratory medications.
Last year, AAHomecare commissioned a study by Muse and Associates that evaluated the services of 109 pharmacies. It found that the ASP reimbursement formula would under reimburse the actual cost of providing respiratory medications. That study concluded that a $68 dispensing fee would be required to cover all the expenses.
"In my opinion, the government is going to want the fee to be less, and AAHomecare is going to ask for it to be more," said Letson. "When it's all said and done, it will probably end up within $5 of where it is today.